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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 179 added, 97 removed, 280 unchanged (50% of the section changed)

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the “Report”), the audited financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on February 17, 2026, and the risk factors in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2025.

The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (the “Report”), the audited financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on February 17, 2026, and the risk factors in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2025.

This discussion and analysis and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the expectations for future periods.

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• pandemics or epidemics and any effects on our employees, residents and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operations;

• the process and results of our review of strategic alternatives;

• the ability of the Company to complete its proposed dispositions on a timely basis, or at all;

• risks that the Company’s recently completed or proposed dispositions disrupt current plans and operations;

• the anticipated costs related to the Company’s recently completed and proposed dispositions;

• the ability of the Company to realize the anticipated benefits of its recently completed and proposed dispositions and the intended use of proceeds therefrom, as well as the Company’s strategic review;

• reliance on a single asset class (multifamily) and certain geographic areas (Midwest and Mountain West regions) of the U.S.;

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We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for our apartment homes and retention of our residents.

As of March 31, 2026, we owned 61 apartment communities containing 12,263 apartment homes.

Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost was $2.5 billion at March 31, 2026 and December 31, 2025.

As of June 30, 2026, we owned 60 apartment communities containing 12,090 apartment homes.

Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost and excluding assets held for sale, was $2.3 billion at June 30, 2026 and $2.5 billion at December 31, 2025.

Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes.

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We have paid quarterly distributions continuously since our first distribution in 1971.

Overview of the Three Months Ended March 31, 2026

• For the three months ended March 31, 2026, revenue decreased by $2.0 million or 3.0% to $65.1 million, compared to $67.1 million for the three months ended March 31, 2025, primarily due to the sale of 12 apartment communities in the prior year, offset by increased revenue from non-same-store communities.

• Same-store revenues remained consistent year over year, while property operating expenses increased, driving a 1.1% decrease in same-store NOI compared to the same period of the prior year.

• Net loss was $0.77 per diluted share for the three months ended March 31, 2026, compared to net loss of $0.22 per diluted share for the same period of the prior year.

• Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased to $1.12 for the three months ended March 31, 2026, compared to $1.21 for the three months ended March 31, 2025.

See the description of Core FFO on pages 25 and 26 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 27.

This decrease was primarily due to decreased NOI due to dispositions and same-store communities, along with increases in general and administrative expenses and interest expense, offset by increased NOI on non-same-store communities.

Overview of the Three Months Ended June 30, 2026

• Disposed of an apartment community consisting of 176 homes in Denver, Colorado for an aggregate sales price of $30.0 million.

• For the three months ended June 30, 2026, revenue decreased by $2.8 million or 4.0% to $65.8 million, compared to $68.5 million for the three months ended June 30, 2025, primarily due to the sale of 12 apartment communities in the prior year, offset by increased revenue from non-same-store communities.

• Same-store revenues and expenses remained relatively unchanged with a 0.3% increase in same-store NOI compared to the same period of the prior year.

• Net loss was $0.07 per diluted share for the three months ended June 30, 2026, compared to net loss of $0.87 per diluted share for the same period of the prior year.

• Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased to $1.27 for the three months ended June 30, 2026, compared to $1.28 for the three months ended June 30, 2025.

See the description of Core FFO on page 32 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 33.

This decrease was primarily due to decreased NOI as a result of dispositions, along with increases in general and administrative expenses, offset by increased NOI on non-same-store communities.

The drivers of these changes are discussed in more detail in the “Results of Operations” section below.

• Repurchased 45,310 common shares for an average of $55.54 per share.

Results of Operations

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Net operating income (“NOI”) is a non-GAAP financial measure, which we define as total real estate revenues less property operating expenses, including real estate taxes and is reconciled to operating income (loss) below.

We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by sales of real estate and other investments, impairment, depreciation, amortization, financing costs, property management expenses, casualty losses net of recoveries, loss on litigation settlement, and general and administrative expenses.

NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance.

We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that excludes gain (loss) on the sale of real estate and other investments, impairment, depreciation and amortization, financing costs, including interest and other income, losses on extinguishment of debt, and interest expense, property management expenses, casualty losses net of recoveries, loss on litigation settlement, and general and administrative expenses.

NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance.

We have provided certain information on a same-store and non-same-store basis.

Same-store apartment communities are owned or stabilized for substantially all of the periods being compared and, in the case of newly-acquired or constructed communities, have achieved a target level of physical occupancy of 90%, or re-positioned communities when they have achieved stabilized operations.

Same-store apartment communities are owned or stabilized for substantially all of the periods being compared and, in the case of newly-acquired or constructed communities, have achieved a target level of physical occupancy of 90%, or repositioned communities when they have achieved stabilized operations.

We define re-positioned communities as having significant development and construction activity on existing buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of improved community cash flow and competitive position through extensive unit and amenity upgrades.

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Not all communities undergoing value add are considered a re-positioned community.

Non-same-store communities are communities not owned or stabilized as of the beginning of the previous year, including re-positioned communities, and excluding communities held for sale and the non-multifamily components of mixed-use properties.

Non-same-store communities are communities not owned or stabilized as of the beginning of the previous year, including re-positioned communities, excluding the non-multifamily components of mixed-use properties.

On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate the performance of existing apartment communities and their contribution to net income (loss).

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The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store communities are generally due to the addition of those communities to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio.

For the comparison of the three months ended March 31, 2026 and 2025, 58 apartment communities were same-store and three apartment communities and one apartment community were non-same-store, respectively.

Sold communities are included in “Dispositions,” for all periods presented, while “Other properties” includes non-multifamily properties and the non-multifamily components of mixed-use properties.

For the comparison of the six months ended June 30, 2026 and 2025, 44 apartment communities were same-store and three apartment communities and two apartment community were non-same-store, respectively.

Communities designated as held for sale are included in “Non-same-store and held for sale.” For the six months ended June 30, 2026, 13 apartment communities were designated as held for sale and included in “Non-same-store and held for sale.” Sold communities are included in “Dispositions,” for all periods presented, while “Other properties” includes non-multifamily properties and the non-multifamily components of mixed-use properties.

During the three and six months ended June 30, 2026, we disposed of one apartment community consisting of 176 apartment homes.

During the year ended December 31, 2025, we disposed of 12 apartment communities consisting of 1,511 apartment homes.

Reconciliation of Operating Income (Loss) to Net Operating Income (non-GAAP)

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(in thousands, except percentages)

Three Months Ended March 31,

2026 2025 $ Change % Change

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 $ Change % Change 2026 2025 $ Change % Change

Operating income (loss)

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Depreciation and amortization 25,075 27,097 (2,022) (7.5) % 51,573 54,751 (3,178) (5.8) %

Impairment of real estate investments 9,700 — 9,700 N/A

Impairment of real estate investments — 14,543 (14,543) (100.0) % 9,700 14,543 (4,843) (33.3) %

General and administrative expenses 5,659 4,382 1,277 29.1 % 11,991 9,379 2,612 27.8 %

Gain on sale of real estate and other investments

(271) — (271) N/A (271) — (271) N/A

Net operating income $ 41,135 $ 42,018 $ (883) (2.1) % $ 80,630 $ 82,380 $ (1,750) (2.1) %

* Not a meaningful percentage.

The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three months ended March 31, 2026 and 2025.

The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three and six months ended June 30, 2026 and 2025.

(in thousands, except percentages)

Three Months Ended March 31,

2026 2025 $ Change % Change

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 $ Change % Change 2026 2025 $ Change % Change

Same-store (1)

$ 49,996 $ 49,931 $ 65 0.1 % $ 99,426 $ 99,464 $ (38) — %

Non-same-store (1)

Non-same-store and held for sale (1)

14,212 9,909 4,303 * 28,137 18,823 9,314 *

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18,790 18,809 (19) (0.1) % 38,437 37,685 752 2.0 %

Non-same-store (1)

Non-same-store and held for sale (1)

5,190 3,797 1,393 * 10,467 7,617 2,850 *

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31,206 31,122 84 0.3 % 60,989 61,779 (790) (1.3) %

Non-same-store (1)

Non-same-store and held for sale (1)

9,022 6,112 2,910 * 17,670 11,206 6,464 *

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Depreciation and amortization (25,075) (27,097) (2,022) (7.5) % (51,573) (54,751) (3,178) (5.8) %

Impairment of real estate investments (9,700) — 9,700 N/A

Impairment of real estate investments — (14,543) (14,543) (100.0) % (9,700) (14,543) (4,843) (33.3) %

General and administrative expenses (5,659) (4,382) 1,277 29.1 % (11,991) (9,379) 2,612 27.8 %

Gain on sale of real estate and other investments

271 — 271 N/A 271 — 271 N/A

Interest expense (10,623) (10,724) (101) (0.9) % (21,093) (20,359) 734 3.6 %

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* Not a meaningful percentage.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Weighted Average Occupancy (1)

2026 2025 2026 2025

Same-store 96.0 % 95.9 % 95.7 % 95.9 %

Non-same-store 92.0 % 86.4 %

Non-same-store and held for sale 95.9 % 94.0 % 95.0 % 94.0 %

Total 96.0 % 95.6 % 95.6 % 95.6 %

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Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs and other real estate companies.

Number of Apartment Homes as of March 31, 2026 as of March 31, 2025

Number of Apartment Homes as of June 30, 2026 as of June 30, 2025

Same-store 9,407 9,406

Non-same-store 1,049 629

Held for sale (1)

Dispositions — 1,687

Total 12,090 13,353

(1) Number of apartment homes related to properties classified as held for sale as of June 30, 2026 .

Same-store analysis.

Revenue from same-store communities remained consistent in the three months ended March 31, 2026, compared to the same period in the prior year.

The average monthly revenue per occupied home for the three months ended March 31, 2026 remained consistent with comparable periods while weighted average occupancy decreased 0.4% from 95.8% for the three months ended March 31, 2025 to 95.4% for the three months ended March 31, 2026.

Property operating expenses, including real estate taxes, at same-store communities increased by 1.7% or $393,000 in the three months ended March 31, 2026, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $490,000, primarily due to an increase in repairs and maintenance, utilities, and administrative and marketing expenses.

Non-controllable expenses at same-store communities decreased by $97,000, due to a decrease in real estate taxes.

Same-store NOI decreased by $388,000 to $35.3 million for the three months ended March 31, 2026, compared to $35.7 million in the same period of the prior year.

Non-same-store analysis.

Revenue from non-same-store communities increased by $4.7 million in the three months ended March 31, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes at non-same-store communities increased by $1.7 million.

NOI at non-same-store communities increased by $3.0 million for the three months ended March 31, 2026, compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-same-store communities is due to the addition of two apartment communities, one during the second quarter of the prior year and one during the third quarter of the prior year, offset by a $149,000 decrease in NOI from a community that experienced an increase in expenses resulting from the cancellation of contracts and uninsured loss events.

Revenue from same-store communities remained consistent in the three months ended June 30, 2026, compared to the same period in the prior year.

The average monthly revenue per occupied home for the three months ended June 30, 2026 remained consistent with comparable periods while weighted average occupancy increased 0.1% from 95.9% for the three months ended June 30, 2025 to 96.0% for the three months ended June 30, 2026.

Property operating expenses, including real estate taxes, at same-store communities decreased by 0.1% or $19,000 in the three months ended June 30, 2026, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $23,000, primarily due to an increase in utilities, on-site compensation, and administrative and marketing expenses, offset by a decrease in repairs and maintenance.

Non-controllable expenses at same-store communities decreased by $42,000, due to a decrease in real estate taxes, offset by an increase in insurance-related losses.

Same-store NOI increased by $84,000 to $31.2 million for the three months ended June 30, 2026, compared to $31.1 million in the same period of the prior year.

Revenue from same-store communities remained consistent in the six months ended June 30, 2026, compared to the same period in the prior year.

The average monthly revenue per occupied home for the six months ended June 30, 2026 remained consistent with comparable periods while weighted average occupancy decreased from 95.9% for the six months ended June 30, 2025 to 95.7% for six months ended June 30, 2026.

Property operating expenses, including real estate taxes, at same-store communities increased by 2.0% or $752,000 in the six months ended June 30, 2026, compared to the same period in the prior year.

At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $665,000, primarily due to an increase in administrative and marketing costs, utilities, and repairs and maintenance.

Non-controllable expenses at same-store communities increased by $87,000, due to insurance-related losses and offset by real estate taxes.

Same-store NOI decreased by $790,000 to $61.0 million for the six months ended June 30, 2026, compared to $61.8 million in the same period of the prior year.

Non-same-store and held for sale analysis.

Revenue from non-same-store and held for sale communities increased by $4.3 million in the three months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes at non-same-store and held for sale communities increased by $1.4 million.

NOI at non-same-store and held for sale communities increased by $2.9 million for the three months ended June 30, 2026, compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-same-store and held for sale communities is primarily due to the addition of two apartment communities, one during the second quarter of the prior year and one during the third quarter of the prior year.

Revenue from non-same-store and held for sale communities increased by $9.3 million in the six months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes at non-same-store and held for sale communities increased by $2.9 million for the six months ended June 30, 2026, compared to the same period in the prior year.

NOI at non-same-store and held for sale communities increased by $6.5 million for the six months ended June 30, 2026, compared to the same period of the prior year.

The increase in revenue, property operating expenses, and NOI from non-

same-store and held for sale communities is primarily due to the addition of two apartment communities, one during the second quarter of the prior year and one during the third quarter of the prior year.

Other properties analysis.

Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $104,000 in the three months ended March 31, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties decreased by $27,000, compared to the same period in the prior year.

Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $138,000 in the three months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties increased by $58,000, compared to the same period in the prior year.

NOI at other properties increased by $80,000, compared to the same period in the prior year.

The increase in revenue and NOI on other properties is primarily due to increased occupancy in the current period.

Revenue from other properties increased by $248,000 in the six months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, at other properties increased by $32,000, compared to the same period in the prior year.

NOI at other properties increased by $216,000, compared to the same period in the prior year.

The increase in revenue and NOI on other properties is primarily due to increased occupancy in the current period.

Dispositions analysis.

Revenue from dispositions decreased by $6.9 million in the three months ended March 31, 2026, compared to the same period in the prior year.

Revenue from dispositions decreased by $7.3 million in the three months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, decreased by $3.3 million on dispositions, compared to the same period in the prior year.

NOI on dispositions decreased $4.0 million, compared to the same period in the prior year.

We disposed of five apartment communities during the third quarter of 2025 and seven apartment communities in the fourth quarter 2025.

We disposed of five apartment communities during the third quarter of 2025 and seven apartment communities in the fourth quarter 2025 compared to one apartment community in the second quarter of 2026.

Revenue from dispositions decreased by $14.3 million in the six months ended June 30, 2026, compared to the same period in the prior year.

Property operating expenses, including real estate taxes, decreased by $6.7 million on dispositions, compared to the same period in the prior year.

NOI on dispositions decreased by $7.6 million, compared to the same period in the prior year.

Property management expenses .

Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by 2.2% to $2.4 million in the three months ended March 31, 2026.

Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by 12.5% to $2.1 million in the three months ended June 30, 2026.

The decrease was primarily due to reduced compensation related costs and administrative costs resulting from a reduction in headcount and number of communities compared to the same period of the prior year.

Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by $353,000 to $4.5 million in the six months ended June 30, 2026, compared to $4.8 million in the same period of the prior year.

The decrease was primarily due to reduced compensation related costs resulting from a reduction in headcount compared to the same period of the prior year, offset by an increase in fees paid to third parties for management of an apartment community we acquired in the second quarter of 2025.

Casualty loss, net of recoveries.

Casualty activity was a net recovery of $21,000 in the three months ended March 31, 2026, compared to a net loss of $532,000 in the same period of the prior year.

The change is primarily due to claim activity in excess of our deductible along with increases in insurance recoveries and subrogation proceeds compared to the prior year.

Casualty activity was a net recovery of $206,000 in the three months ended June 30, 2026, compared to a net casualty loss of $399,000 in the same period of the prior year.

The change is primarily due to fewer large loss claims, along with increases in insurance recoveries and subrogation proceeds compared to the prior year.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Casualty activity was a net recovery of $227,000 in the six months ended June 30, 2026, compared to a net casualty loss of $931,000 in the same period of the prior year.

The change is primarily due to fewer large losses in the current period, settlement of multi-year claims in excess of our deductible along with subrogation proceeds compared to the same period of the prior year.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Depreciation and amortization.

Depreciation and amortization decreased by 4.2% to $26.5 million in the three months ended March 31, 2026, compared to $27.7 million in the same period of the prior year, primarily attributable to a decrease of $3.0 million in depreciation from dispositions that occurred in the prior year and a decrease of $861,000 on same-store communities primarily due to amortization of in-place leases in the prior year that did not occur in the current year, offset by an increase of $3.1 million on non-same-store driven by the addition of two apartment communities, one during the second quarter of the prior year and one in the third quarter of the prior year, along with value add and acquisition capital projects and amortization of in-place leases.

Depreciation and amortization decreased by 7.5% to $25.1 million in the three months ended June 30, 2026, compared to $27.1 million in the same period of the prior year, primarily attributable to a decrease of $3.3 million in depreciation from dispositions that occurred in the prior year and a decrease of $455,000 on communities classified as held for sale during the current period, offset by an increase of $1.2 million on non-same-store driven by the addition of two apartment communities, one during the second quarter of the prior year and one in the third quarter of the prior year, along with value add and acquisition capital projects.

Depreciation and amortization decreased by $3.2 million to $51.6 million in the six months ended June 30, 2026, compared to $54.8 million in the same period of the prior year, primarily attributable to a decrease of $6.3 million in depreciation from dispositions that occurred in the prior year, a decrease of $1.0 million on same-store communities primarily due to amortization of in-place leases in the prior year that did not occur in the current year, and $410,000 from communities classified as held for sale during the current period, offset by an increase of $4.3 million on non-same-store driven by the addition of two apartment communities, one during the second quarter of the prior year and one in the third quarter of the prior year, along with value add and acquisition capital projects and amortization of in-place leases.

Impairment of real estate investments.

There was no impairment of real estate investments in the three months ended June 30, 2026, compared to $14.5 million in the three months ended June 30, 2025.

Impairment during the three months ended June 30, 2025 was the result of five apartment communities that were written down to estimated fair value in connection with their reclassification to assets held for sale.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Impairment of real estate investments was $9.7 million in the six months ended June 30, 2026, compared to $14.5 million in the six months ended June 30, 2025.

Impairment during the six months ended June 30, 2026, was due to one apartment community written down to estimated fair value and the impairment during the six months ended June 30, 2025 was the result of five apartment communities that were written down to estimated fair value in connection with their reclassification to assets held for sale.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

General and administrative expenses.

General and administrative expenses increased by $1.3 million to $6.3 million in the three months ended March 31, 2026, compared to $5.0 million in the same period of the prior year.

The increase was primarily due to $977,000 in fees related to strategic review and increased compensation costs from higher share-based compensation and other compensation related costs in the three months ended March 31, 2026, compared to the same period of the prior year.

General and administrative expenses increased by $1.3 million to $5.7 million in the three months ended June 30, 2026, compared to $4.4 million in the same period of the prior year.

The increase was primarily due to $835,000 from severance and related costs, $278,000 in professional and legal fees, and increased compensation costs from higher share-based compensation costs in the three months ended June 30, 2026, compared to the same period of the prior year.

General and administrative expenses increased by $2.6 million to $12.0 million in the six months ended June 30, 2026, compared to $9.4 million in the same period of the prior year.

The increase was primarily due to $1.1 million in fees related to strategic review, $835,000 from severance and related costs, increased compensation costs from higher share-based compensation costs, and $172,000 in professional and legal fees in the six months ended June 30, 2026, compared to the same period of the prior year.

Gain (loss) on sale of real estate.

Gain on sale of real estate for the three and six months ended June 30, 2026 was $271,000 compared to no gain or loss in the same periods of the prior year.

The gain on sale was due to the disposition of one apartment community and associated commercial space in the current period compared to no dispositions in the same periods of the prior year.

See Note 8 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.

Interest expense.

Interest expense increased by 8.7% to $10.5 million in the three months ended March 31, 2026, compared to $9.6 million in the same period of the prior year, primarily due to a higher outstanding balance on our lines of credit resulting from the acquisitions of two apartment communities, one in the second quarter and one in the third quarter of the prior year, along with higher mortgage interest and amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year.

Interest expense decreased by 0.9% to $10.6 million in the three months ended June 30, 2026, compared to $10.7 million in the same period of the prior year, primarily due to a reduction in interest on mortgages payable, offset by an increase in interest on our lines of credit due to higher outstanding balances resulting from the acquisitions of two apartment communities in the prior year, one in the second quarter and one in the third quarter of the prior year, along with use of the line of credit to payoff mortgages and higher amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year.

Interest expense increased by $734,000 to $21.1 million in the six months ended June 30, 2026, compared to $20.4 million in the same period of the prior year, primarily due to a higher outstanding balance on our lines of credit resulting from the acquisitions of two apartment communities, one in the second quarter and one in the third quarter of the prior year, along with use of the line of credit to payoff mortgages and amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year, offset by a reduction in mortgage interest.

Interest and other income.

Interest and other income increased to $890,000 in the three months ended March 31, 2026, compared to $708,000 in the same period of the prior year.

Interest and other income decreased to $709,000 in the three months ended June 30, 2026, compared to $735,000 in the same period of the prior year.

The decrease was primarily due to lower interest income on cash balances in the current period compared to the same period of the prior year.

Interest and other income increased to $1.6 million in the six months ended June 30, 2026, compared to $1.4 million in the same period of the prior year.

The increase was primarily due to an unrealized gain on investments and interest income from a real estate related note receivable which has a higher principal balance in the current period compared to the same period of the prior year.

Net loss available to common shareholders.

Net loss available to common shareholders was $12.9 million for the three months ended March 31, 2026, compared to a net loss of $3.7 million in the three months ended March 31, 2025.

Net loss available to common shareholders was $1.0 million for the three months ended June 30, 2026, compared to a net loss of $14.5 million in the three months ended June 30, 2025.

Net loss available to common shareholders was $13.9 million for the six months ended June 30, 2026, compared to a net loss of $18.2 million for the six months ended June 30, 2025.

Funds from Operations and Core Funds from Operations .

We believe that Funds from Operations (“FFO”), which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation and amortization.

because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation and amortization.

We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc.

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Due to limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition.

We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with this definition.

We believe that all such interpretations not specifically identified in the Nareit definition are consistent with this definition.

Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.

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Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies.

FFO should not be considered as an alternative to net income (loss) or any other GAAP measurement of

performance, but rather should be considered as an additional, supplemental measure.

FFO should not be considered as an alternative to net income (loss) or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure.

FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including our ability to service indebtedness or make distributions to shareholders.

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Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

Net loss available to common shareholders for the three months ended March 31, 2026, was $12.9 million compared to net loss of $3.7 million for the same period of the prior year.

FFO applicable to common shares and Units for the three months ended March 31, 2026, decreased to $21.1 million compared to $23.2 million for the comparable period of the prior year, representing a decrease of 8.9%.

This FFO decrease was primarily due to decreased NOI from dispositions and same-store communities along with increases in general and administrative expenses and interest expense, offset by increased NOI from non-same-store communities.

Net loss available to common shareholders for the three months ended June 30, 2026, was $1.0 million compared to net loss of $14.5 million for the same period of the prior year.

FFO applicable to common shares and Units for the three months ended June 30, 2026, decreased to $23.5 million compared to $24.5 million for the comparable period of the prior year, representing a decrease of 4.0%.

This FFO decrease was primarily due to decreased NOI from dispositions along with an increase in general and administrative expense, offset by increased NOI from non-same-store communities and decreased casualty loss, net of recoveries.

Net loss available to common shareholders for the six months ended June 30, 2026, was $13.9 million compared to net loss of $18.2 million for the same period of the prior year.

FFO applicable to common shares and Units for the six months ended June 30, 2026, decreased to $44.7 million compared to $47.7 million for the comparable period of the prior year, representing a decrease of 6.4%.

Reconciliation of Net Loss Available to Common Shareholders to Funds from Operations and Core Funds from Operations

(in thousands, except per share and unit amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Funds from Operations:

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Impairment of real estate investments — 14,543 9,700 14,543

Gain on sale of real estate

(271) — (271) —

FFO applicable to common shares and Units $ 23,549 $ 24,537 $ 44,650 $ 47,709

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Non-cash casualty (recovery) loss

(65) 149 (258) 431

Interest rate swap amortization — 174 — 349

Amortization of assumed debt 489 418 854 835

Severance and related costs 880 — 880 —

Legal and other costs related to strategic review 127 — 1,104 —

Other miscellaneous items (1)

— 19 (209) (48)

Core FFO applicable to common shares and Units $ 24,980 $ 25,297 $ 47,021 $ 49,276

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Effect of operating partnership Units for FFO and Core FFO

895 971 905 975

Effect of Series D preferred units for FFO and Core FFO

82 228 82 228

Effect of Series E preferred units for FFO and Core FFO

1,883 1,905 1,888 1,906

Effect of dilutive restricted stock units and stock options for FFO and Core FFO

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Acquisitions and Dispositions

We did not acquire or dispose of real estate during the three months ended March 31, 2026 and 2025.

We did not acquire new real estate during the six months ended June 30, 2026.

During the six months ended June 30, 2026, we disposed of one apartment community in one transaction for a sales price of $30.0 million.

Refer to Note 8 in the Condensed Consolidated Financial Statements for more information.

Distributions Declared

Distributions of $0.77 per common share and Unit were declared during the three months ended March 31, 2026 and 2025.

Distributions of $0.9655 per Series D preferred unit were declared during the three months ended March 31, 2026 and 2025.

Distributions of $0.96875 per Series E preferred unit were declared during the three months ended March 31, 2026 and 2025.

Distributions of $0.77 and $1.54 per common share and Unit were declared during the three and six months ended June 30, 2026 and 2025.

Distributions of $0.9655 and $1.931 per Series D preferred unit were declared during the three and six months ended June 30, 2026 and 2025.

Distributions of $0.96875 and $1.9375 per Series E preferred unit were declared during the three and six months ended June 30, 2026 and 2025.

Liquidity and Capital Resources

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If we are unable to obtain capital from other sources, we may not be able to pay the distribution required to maintain our status as a REIT, make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements or undertake value add renovation opportunities with respect to our existing portfolio of operating assets.

As of March 31, 2026, we had total liquidity of approximately $267.1 million, which included $259.6 million available on the lines of credit based on the value of unencumbered properties and $7.6 million of cash and cash equivalents.

As of June 30, 2026, we had total liquidity of approximately $242.6 million, which included $234.0 million available on the lines of credit based on the value of unencumbered properties and $8.6 million of cash and cash equivalents.

As of December 31, 2025, we had total liquidity of approximately $267.9 million, which included $255.1 million available on the lines of credit based on the value of unencumbered properties and $12.8 million of cash and cash equivalents.

As of March 31, 2026, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $400.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility” or “Facility”).

As of June 30, 2026, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $400.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility” or “Facility”).

In May 2025, we exercised the accordion feature of the Facility, expanding the borrowing capacity by $150.0 million to $400.0 million.

Prior to the exercise of the accordion feature, the line of credit had total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties.

As of March 31, 2026, there was $150.0 million outstanding on this line of credit, bearing interest at a rate of 4.88%, and additional borrowing availability was $250.0 million.

As of June 30, 2026, there was $176.0 million outstanding on this line of credit, bearing interest at a rate of 4.87%, and additional borrowing availability was $224.0 million.

As of December 31, 2025, there was $154.0 million outstanding, bearing interest at a rate of 5.12%, and additional borrowing availability was $246.0 million.

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This operating line of credit terminates in September 2026 and is designed to enhance treasury management activities and more effectively manage cash balances.

As of March 31, 2026 there was $429,000 outstanding balance on this line of credit, bearing interest at a rate of 5.88%, compared to $925,000 outstanding as of December 31, 2025, bearing interest at a rate of 5.91%.

As of June 30, 2026 the interest rate on this line of credit was 5.87% and there was no outstanding balance, compared to $925,000 outstanding as of December 31, 2025, bearing interest at a rate of 5.91%.

We have a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc.

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We also issued $125.0 million of senior unsecured promissory notes (the “Unsecured Club Notes”, and collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), under a separate private note purchase agreement with PGIM and certain other lenders.

The following table shows the notes issued under both agreements as of March 31, 2026 and December 31, 2025.

The following table shows the notes issued under both agreements as of June 30, 2026 and December 31, 2025.

(in thousands)

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The FMCF is currently secured by mortgages on 7 apartment communities.

The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended, weighted average fixed interest rate of 2.78%.

As of March 31, 2026 and December 31, 2025, the FMCF had a balance of $198.9 million.

The notes are interest-only, with varying maturity dates between September 2028 and September 2033, and a blended, weighted average fixed interest rate of 2.78%.

As of June 30, 2026 and December 31, 2025, the FMCF had a balance of $198.9 million.

The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

Mortgage loan indebtedness, excluding unamortized premiums and discounts and the FMCF, was $398.6 million on 10 apartment communities at March 31, 2026 and $400.1 million on 10 apartment communities at December 31, 2025.

Mortgage loan indebtedness, excluding unamortized premiums and discounts and the FMCF, was $346.3 million on 9 apartment communities at June 30, 2026 and $400.1 million on 10 apartment communities at December 31, 2025.

All of our mortgage debt is collateralized by apartment communities and is non-recourse at fixed rates of interest, with staggered maturities.

This reduces the exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on our results of operations and cash flows.

As of March 31, 2026 and December 31, 2025, the weighted average interest rate on mortgage debt was 3.88%.

As of June 30, 2026 and December 31, 2025, the weighted average interest rate on mortgage debt was 3.94% and 3.88%, respectively.

Further information, including principal payments due on our mortgage indebtedness and other tabular information, can be found in Note 5 - Debt in the Condensed Consolidated notes.

Our borrowings are subject to customary covenants and limitations.

We believe that we were in compliance with all such covenants and limitations as of March 31, 2026.

We have an at the market offering (“ATM Program”) through which we may offer and sell common shares in amounts and at times determined by management.

We believe that we were in compliance with all such covenants and limitations as of June 30, 2026.

We have entered into an equity distribution agreement in connection with an at-the-market offering program (“ATM Program”) through which we may offer and sell common shares in amounts and at times determined by management.

The maximum aggregate offering price of common shares available for offer and sale thereunder is $500.0 million.

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The proceeds from the sale of common shares under the ATM Program may be used for general corporate purposes, including the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness.

There were no sales of common shares under the ATM program during the three months ended March 31, 2026 and 2025.

As of March 31, 2026, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM Program.

There were no sales of common shares under the ATM program during the three and six months ended June 30, 2026 and 2025.

As of June 30, 2026, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM Program.

Further information can be found in Note 4 - Mezzanine Equity and Equity in the Condensed Consolidated notes.

Effective July 31, 2025, the Board of Trustees authorized a new share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $100.0 million of our outstanding common shares.

Effective July 31, 2025, the Board of Trustees authorized a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $100.0 million of our outstanding common shares.

Under the Share Repurchase Program, we are authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended.

The specific timing and amount of repurchases may vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.

As of March 31, 2026, the Company had $96.5 million remaining authorized for purchase under the Share Repurchase Program.

We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on March 31, 2026 and December 31, 2025.

The table below provides details on the shares repurchased under this program during the three and six months ended June 30, 2026.

There were no shares repurchased during the three and six months ended June 30, 2025.

As of June 30, 2026, the Company had $94.0 million remaining authorized for purchase under the Share

Repurchase Program.

(in thousands, except per share amounts)

Three Months Ended June 30, Number of Common Shares Aggregate Cost (1)

Average Price Per Share (1)

2026 45 $ 2,516 $ 55.54

Six Months Ended June 30,

2026 45 $ 2,516 $ 55.54

(1) Amount includes commissions.

We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on June 30, 2026 and December 31, 2025.

Each Series E preferred unit has a par value of $100.

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Each Series E preferred unit is convertible, at the holder’s option, into 1.20482 Units.

The Series E preferred units had an aggregate liquidation preference of $156.3 million and $157.0 million as of March 31, 2026 and December 31, 2025, respectively.

The Series E preferred units had an aggregate liquidation preference of $155.9 million and $157.0 million as of June 30, 2026 and December 31, 2025, respectively.

The holders of the Series E preferred units do not have voting rights.

We had 59,400 Series D preferred units outstanding on March 31, 2026 and December 31, 2025.

We had 59,400 Series D preferred units outstanding on June 30, 2026 and December 31, 2025.

The Series D preferred units have a par value of $100 per preferred unit.

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Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units.

The Series D preferred units had an aggregate liquidation value of $5.9 million at March 31, 2026 and December 31, 2025.

The Series D preferred units had an aggregate liquidation value of $5.9 million at June 30, 2026 and December 31, 2025.

Changes in Cash, Cash Equivalents, and Restricted Cash

As of March 31, 2026, we had cash and cash equivalents of $7.6 million and restricted cash consisting of $2.7 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As of June 30, 2026, we had cash and cash equivalents of $8.6 million and restricted cash consisting of $1.9 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As of December 31, 2025, we had cash and cash equivalents of $12.8 million and restricted cash consisting of $2.8 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash which are presented in the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.

We generated cash flows from operations of $21.4 million, during the three months ended March 31, 2026.

During the three months ended March 31, 2026, we used capital for various activities, including:

• Funding capital improvements for apartment communities of approximately $5.3 million;

• Repaying $4.5 million of principal, net of draws, on our lines of credit;

In addition to cash flows from operations of $44.1 million during the six months ended June 30, 2026, we generated capital from various activities, including:

• Receiving $29.5 million in net proceeds from the sale of one apartment community;

• Receiving $21.1 million in net draws on our lines of credit.

During the six months ended June 30, 2026, we used capital for various activities, including:

• Repaying $53.8 million of mortgage principal;

• Funding capital improvements for apartment communities of approximately $13.0 million;

• Paying distributions on common shares, Series E preferred units, and Units of $30.3 million;

• Repurchasing 45,310 common shares for an average of $55.54 per share.

Contractual Obligations and Other Commitments

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High inflation could have a negative impact on our residents and their ability to absorb rent increases.

We also continue to monitor pressures surrounding supply chain challenges, including the impact of tariffs.

Supply chain and inflationary pressures are likely to result in increased operating expenses, specifically, increases in energy costs, labor related costs, and construction materials for repairs and maintenance or capital projects.

We also continue to monitor pressures surrounding supply chain challenges, including the impact of tariffs and geopolitical risk.

Supply chain and inflationary pressures are likely to result in increased operating expenses, specifically, increases in

energy costs, labor related costs, and construction materials for repairs and maintenance or capital projects.

A worsening of the current environment could contribute to delays in obtaining construction materials and result in higher than anticipated costs, which could prevent us from obtaining expected returns on value add projects.

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Off-Balance Sheet Arrangements

As of March 31, 2026, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

As of June 30, 2026, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies

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Actual results could differ from those estimates.

Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information.

There have been no other significant changes to the critical accounting policies during the three months ended March 31, 2026.

A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026, under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information.

There have been no other significant changes to the critical accounting policies during the six months ended June 30, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis